Facebook, Groupon Go to War Over Deals

It looks as if Facebook and Groupon are getting ready to compete hard in the group-deal market.

Facebook signaled its plans when it upgraded its Deals landing page recently to tout new services that look a lot like Groupon's. Facebook users will be able to share deals with friends and get messages on deals through mobile apps while they're on the go.

The landing page includes a prominent "Offer a Deal for your business" link directed at merchants, promising benefits of Facebook Deals, including: "Let Facebook do the marketing. Team up with our specialists who will be with you every step of the way to market your business on Facebook."

Uh-oh... Is Facebook after your job?

The "Offer a Deal" page includes a form that marketers can fill out to be contacted by a Facebook rep. The form includes a space for your Facebook fan page.

Facebook says it will specialize in offering deals that can be shared among friends: "You won’t get your legs waxed with friends," Emily White, Facebook’s director of local operations, told the Financial Times. "You dine out, you go to concerts, you do outdoor activities. We want to make sure those experiences are maximised."

I signed up for the Deals updates, and the process illustrates the power of what Facebook has to offer. A consumer signing up with a deal service elsewhere has to enter his or her demographic information -- at minimum, email address and location -- and then verify receipt of the email. But Facebook Deals sign-up was three clicks, no typing, because Facebook already has the deal information.

Easy sign-up will bring consumers in, and consumers will make Facebook Deals attractive to marketers.

Facebook Deals are initially offered in San Francisco, San Diego, Dallas, Austin, and Atlanta, according to Inside Facebook.

Previously, Deals were only available to users of Facebook's Places location-sharing service, which displays offers from local merchants, but only when the users are physically near those merchants.

Groupon is fighting back, cutting a deal with AdParlor to manage Groupon's entire advertising spend on Facebook (so even if Facebook loses this battle, it wins). These will include generic ads to get people to sign up to Groupon, as well as targeted ads for specific deals.

AdParlor specializes in Facebook advertising, saying it works with the biggest advertisers on that social network, managing more than 15 billion monthly impressions. It integrates Groupon's API with the Facebook Ads API and will target ads to Facebook users as soon as a deal goes live.

Local deals are hot. Google tried and failed to buy Groupon in December, then started its own local coupon service. Amazon invested $175 million in the coupon site, LivingSocial. And FourSquare expanded its Specials feature last week.

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Hi Dave, I couldn't agree more. Groupon's a great company but if it doesn't integrate well with the rest of your life (as Facebook's service does), it can die a slow and painful death. Google will make a great ally.

Dave Sasson - Recently, I've had my mind changed about Groupon. Previously, I thought it was a fly-by-night business with a simple gimmick, easily overwhelmed by Google or Facebook implementing their own deal-a-day program.

Now, I think they're pretty smart. They're implementing a difficult business model that only SEEMS simple.

Maybe the Groupon board and investors should go re-visit that Google offer, if it is even available anymore.Groupon at the moment is still the leader in this space and has a lot of leverage if it wants to make a deal, but this industry is still in its infancy and the competition is becoming fierce.

Damith - That's a really good point. Deal-of-the-day and group discounts may prove to be fads, but Groupon's batallion of salespeople with their knowledge of both local businesses AND the Internet will prove to be an enduring asset. That's their REAL value.

Things are not looking so bright for "deal-of-the-day Web site" but Groupon does have its own fixed channel from Sourcing to Selling and they will have a method to come out strong while providing extra special deals in the States that have this "Facebook Deals" running, so right now all bets are off !!

It will be good on the consumer though with offers and slashes from both Facebook and Groupon. Time to shop people!!!

Groupon looks extremely vulnerable now. After all, what they do should be easy for a company with bigger resources, like Facebook, to emulate.

The problem with that kind of thinking is that any companies on the Internet LOOK like they should be easy to emulate, but turn out not to be. Amazon.com and Netflix are two examples. Both should, by all logic, have been susceptible to squashing by brick-and-mortar retailers, but the execution proved much harder.

Although with Amazon and Netflix, the brick-and-mortar retailers faced cultural barriers that probably don't exist with Facebook vs. Groupon.

Interesting development. I do think Facebook has a slight advantage over Groupon because Facebook has the end user, the costumer, as well as the marketer, the business fan page. But it's definitely a fight to watch...

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